Is it valid from one state to the next? Let’s say you have had enough of those Michigan winters and one day you happen to see the headline – North Carolina is ranked #1 among places to retire. A year later you’ve just arrived in your new NC home and you’ve ordered a pizza while you contemplate the tedious chore of unpacking. Wait a minute….what about your Will and other estate planning documents? Do they still work? Or better yet….I wonder what happened to those documents? Of course that is the last thing on your mind, but somewhere on your “To Do” list you should include a review of your documents and how they work in your new state.

First things first: Yes, an out-of-state Will should be valid in North Carolina as long as it was prepared and executed in accordance with the laws of the other state. This is also true for other documents such as financial Power of Attorney and Health Care Power of Attorney. The problem is that these out-of-state documents may be much more difficult to use here in North Carolina and this may create headaches for your family. Our courts, financial institutions and health care providers, will likely not be familiar with most out-of-state forms and this disconnect leads to delay and added administrative requirements.

North Carolina has very specific requirements for language which must be included in a Will for the document to be probated in the normal course. Without this magic language, it can be a real pain to probate a Will; you may have to locate witnesses from years ago in another state, or you may have to pay for a substantial security bond for an out-of-state Executor. For this reason I regularly advise clients that, at a minimum, they should have their documents reviewed by a North Carolina attorney. We often recommend that a client execute a new North Carolina Will to replace their existing document simply to ensure that the necessary language is included to avoid problems with probate. We also regularly replace existing financial Powers of Attorney and Health Care Powers of Attorney with our North Carolina versions because they will be easier to use with our local institutions; since they are fairly standard forms they don’t require much time and expense to prepare.

Some clients have a Living Trust as part of their estate plan which is designed to work in conjunction with the Will. In many cases that Living Trust is designed to continue to function under the old state’s law regardless of where the client may live. One benefit of a Living Trust is that it will not be subject to probate or review by the court at the client’s death. In this case, we are not concerned with any special North Carolina language for these documents and we often don’t recommend any changes to a Living Trust simply because of the relocation to our state.

When people relocate to North Carolina, particularly for retirement, they regularly have other revisions to include in their documents which can be addressed at the same time their new North Carolina documents are prepared. For example, if a client is moving to be near one of their children it is common to have that child serve as the primary fiduciary for the client (e.g. Executor or Health Care Agent) and this will often require an update in the documents. There is also the ever-changing landscape of estate tax laws and this too will dictate changes in documents if they have not been revised recently.

If you or someone you know recently migrated to our fair state, be sure this chore is added to the list right along with changing your driver’s license and voter registration and finding a great Chinese food place.

OK, I’m not talking about an actual spare tire – I’m talking about a Power of Attorney. Yes, a Power of Attorney is just like a spare tire; I’ll let that analogy sink in for a few moments. The term “Power of Attorney” is not foreign to most people, but how many of them really understand what it means?

A Power of Attorney (POA) is a legal document but it has very little to do with an attorney. Although your attorney prepares the document, your attorney is usually not named in the document and has no power under the document. Instead, your POA allows you to name a family member or close family friend as your attorney-in-fact (i.e. your Agent) to handle your financial affairs for you, pay your bills, manage your investments, etc. Many people consider a POA as something intended to be used if you become incapacitated, but most POAs are effective immediately and can be used if you are simply unavailable (for example, when one spouse is traveling out of the country and the other spouse needs to sign loan documents for a bank). The important thing to know is that if you don’t have a POA in place and you become incapacitated, then your family will likely need to have a legal guardian appointed for you by the court; this can be an expensive and time-consuming process.

My clients often struggle with the decision of who to name as the Agent in the POA. My advice is to name someone that you trust implicitly with everything; someone you would gladly hand your credit cards and checkbook to without any concern. Typically a 19 year old child is not the first choice unless your chief goals are to 1) hit all the best concerts within a 2 hour drive, 2) maintain a high profile in the local club scene, and 3) have an endless supply of Red Bull. Most often people pick someone in their family or a close family friend who has sound business judgment and good money management skills. Also, it is important to pick someone who is likely to get along with most everyone in your family; this will hopefully avoid potential conflicts in the future.

A POA does not allow your Agent to do everything for you. For example, your Agent can’t make or change your Will, can’t get a divorce for you, and can’t act in your place as an officer in a company; however, most other legal or financial matters that require your signature are fair game. The POA may also allow your Agent to make gifts to your family from your property and you should make sure you review that option in the document if that is a concern for you one way or the other.

In North Carolina if you sign a POA and later become incapacitated the POA must be recorded in the local Register of Deeds; most financial institutions will require that the document be recorded before honoring it in any event. A financial institution may have other requirements and make the Agent jump through a few other hoops before accepting the POA, but ultimately once they are satisfied that everything is in order they will cooperate with Agent and allow the POA to work as intended.

I am sure you get the point now about driving around without a spare tire. A POA is something that you may never need, but if you do, you will be glad you have it.

Probably one of the worst things that can happen in a decedent’s estate is for a group of beneficiaries who don’t get along to inherit real estate. Under North Carolina law, beneficiaries under a Will are generally vested with title to the property as of the date of the decedent’s death, which means the beneficiaries, and not the executor, have the authority concerning sale of the property. Although Wills often include a provision addressing the executor’s authority to sell real estate, the exact language of the Will is usually insufficient to allow the executor to handle the sale of real estate without involvement of the beneficiaries. That is, if the real estate is not left to the executor with directions to sell the property as part of the estate administration, then the beneficiaries will inherit the property as tenants-in-common as of date of death.

This means that if the beneficiaries desire to sell the property they must all agree on the terms of the sale and they must all be involved in the execution of the documents. Imagine the prospect of involving numerous owners in a sale negotiation and then getting them to agree. Have you ever tried to pick a place to go out to eat based on input from a group of people? Any interested buyer is going to lose patience pretty quickly unless the decision-making can be delegated.

A power of attorney (POA) is the solution. The beneficiaries can appoint one individual (known as the attorney-in-fact) with full authority to negotiate the sale of the property and execute all documents including the deed. This delegation eliminates any required involvement of the beneficiaries — the actual owners of the property. The attorney-in-fact may be the Executor of the decedent’s estate or one of the beneficiaries or some other party; the key is to find someone who can make a good decision about a sale of the property and who is trusted by all the beneficiaries.

It is important to make sure that all of the beneficiaries as well as the beneficiaries’ spouses sign the POA; this is required under NC law to convey good title to the property. Also the POA will need to be duly recorded in the county where the real estate is located. The POA document should ensure that the attorney-in-fact is authorized not only to execute sale documents but also to receive proceeds of the sale on behalf of the beneficiaries. This will ensure that the attorney-in-fact can direct the closing attorney to dispose of the proceeds in the most efficient manner.

So what happens if the beneficiaries can’t agree on what to do and are unwilling to appoint an attorney-in-fact? A mess…a big mess happens. As tenants-in-common, each beneficiary will effectively have a veto right over any decision concerning the property. More importantly, any one beneficiary can initiate legal proceedings to force a sale or a severance of the property, in which case the value of the property will likely be reduced for all concerned. In this case, the POA may still be an option if cooler heads can prevail.